Sherwin-Williams Co., the largest U.S. paint retailer, said Mexico’s antitrust regulator rejected its appeal of a ruling that blocked its acquisition of the Mexican operations of paint maker Consorcio Comex SA.

Sherwin-Williams is reviewing the Federal Economic Competition Commission of Mexico’s decision and is considering its options, including possibly refiling with the regulator, the Cleveland-based company said in a statement. (For more coverage on Mexico, see "Right Moment for Mexico" and "10 Emerging Markets to Watch.")

Sherwin-Williams chairman and chief executive Christopher Connor was trying to double sales in Latin America when he agreed last year to buy Comex for $2.34 billion, including the assumption of debt. With the Mexican regulatory review undecided, Comex split off its U.S. and Canada operations and sold them to Sherwin-Williams last month for $165 million, including assumption of $75 million in liabilities.

Sherwin-Williams dropped 3.5 percent to $187.58 at 9:59 a.m. in New York. The shares have gained 22 percent this year.

Closely held Comex is the largest paint company in Mexico with exclusive sales to 3,300 retailers and eight factories in the country, Sherwin Williams said on Nov. 12.

The commission voted three to two in July to reject Sherwin-Williams’ application, saying the combined company would be able to set artificially high prices. If the takeover proceeded, Sherwin-Williams would have had a market share of 48 percent to 58 percent in Mexico, depending on the product, or as much as 10 times the share of its closest competitor, the regulator said at the time.

Sherwin-Williams’ purchase of Comex operations in the U.S. and Canada included 314 company-owned stores and eight factories, as well as supply agreements with 1,500 external retailers in Canada, the company said Sept. 16.

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